Gatton Kindergarten Association Incorporated T/A Gatton Kindergarten

[2023] FWCA 3031

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.225—Enterprise agreement

Gatton Kindergarten Association Incorporated T/A Gatton Kindergarten

(AG2023/2904)

GATTON KINDERGARTEN EARLY CHILDHOOD ENTERPRISE AGREEMENT 2019

Educational services
COMMISSIONER SIMPSON	BRISBANE, 19 SEPTEMBER 2023

Application for termination of the Gatton Kindergarten Early Childhood Enterprise Agreement 2019

Gatton Kindergarten Association Incorporated T/A Gatton Kindergarten (the Applicant) has filed an application pursuant to s.225 of the Fair Work Act 2009 (the Act) to terminate the Gatton Kindergarten Early Childhood Enterprise Agreement 2019 (the Agreement) after its nominal expiry date.

The Agreement is a single enterprise agreement and its nominal expiry date was 31 December 2022.

The Agreement does not cover any employee organisations (unions).

Section 225 and 226 of the Act relevantly provides:

“225 Application for termination of an enterprise agreement after its nominal expiry date

If an enterprise agreement has passed its nominal expiry date, any of the following may apply to the FWC for the termination of the agreement:

(a)       one or more of the employers covered by the agreement;
(b)       an employee covered by the agreement;
(c)       an employee organisation covered by the agreement.

226 Terminating an enterprise agreement after its nominal expiry date

(1) If an application for the termination of an enterprise agreement is made under section 225, the FWC must terminate the agreement if:

(a) the FWC is satisfied that the continued operation of the agreement would be unfair for the employees covered by the agreement; or

(b) the FWC is satisfied that the agreement does not, and is not likely to, cover any employees; or

(c) all of the following apply:

(i) the FWC is satisfied that the continued operation of the enterprise agreement would pose a significant threat to the viability of a business carried on by the employer, or employers, covered by the agreement;

(ii) the FWC is satisfied that the termination of the enterprise agreement would be likely to reduce the potential of terminations of employment covered by subsection (2) for the employees covered by the agreement;

(iii) if the agreement contains terms providing entitlements relating to the termination of employees’ employment—each employer covered by the agreement has given the FWC a guarantee of termination entitlements in relation to the termination of the agreement.

(1A) However, the FWC must terminate the enterprise agreement under subsection (1) only if the FWC is satisfied that it is appropriate in all the circumstances to do so.

(2) This subsection covers a termination of the employment of an employee:

(a) at the employer’s initiative because the employer no longer requires the job done by the employee to be done by anyone, except where this is due to the ordinary and customary turnover of labour; or

(b) because of the insolvency or bankruptcy of the employer.

(3) In deciding whether to terminate the agreement, the FWC must consider the views of the following covered by the agreement:

(a) the employees (unless there are no employees covered by the agreement);

(b) each employer;

(c) each employee organisation (if any).

Note: The President may be required to direct a Full Bench to perform a function or exercise a power in relation to the matter if any of the employers, employees, or employee organisations, covered by the agreement oppose the termination (see subsection 615A(3)).
(4)       In deciding whether to terminate the agreement (the existing agreement), the FWC must have regard to:
(a)       whether the application was made at or after the notification time for a proposed enterprise agreement that will cover the same, or substantially the same, group of employees as the existing agreement; and
(b)       whether bargaining for the proposed enterprise agreement is occurring; and
(c)       whether the termination of the existing agreement would adversely affect the bargaining position of the employees that will be covered by the proposed enterprise agreement.

(5) In deciding whether to terminate the agreement, the FWC may also have regard to any other relevant matter.

Leticia Lindenmayer from the Applicant filed a Form F24C Statutory Declaration in support of the application to terminate the Agreement. The Statutory Declaration included information indicating that the Applicant felt the Agreement is not as generous as the award.

Directions were issued on 25 August 2023 for the Applicant to serve a copy of the F24B Application on its employees as well as a copy of the F24C Statutory Declaration and Directions. The Directions also provided that if any employee wished to be heard on the matter, they were to submit any views in relation to the Application by 6 September 2023.

The Applicant confirmed, by way of email on 25 August 2023 that it had served a copy of the Application, Statutory Declaration and Directions on its employees.

On 30 August 2023 I sought clarification from the Applicant as the Form F24C declared under section 5.3 there were approximately 15 employees covered by the Agreement, however, the email appeared to have only been served on 3 employees. Ms Lindenmayer responded that they have 15 staff members in total, however only three are covered under the Agreement in question.

To date, no material has been received from any employees of the Applicant.

On the basis of the information provided to me in the Application, and as set out above, I am satisfied that the requirements of s.226 of the Act as are relevant to this Application for termination have been met. The Applicant has nominated 16 October 2023 as a termination date, and I consider that to be an appropriate date. Accordingly, the termination will take effect from 16 October 2023.

I Order accordingly.

COMMISSIONER

Printed by authority of the Commonwealth Government Printer

The applicant, the Gatton Kindergarten Association Incorporated, trading as Gatton Kindergarten, sought to terminate the 2019 enterprise agreement that governs the employment conditions of its employees. The application was heard by the Fair Work Commission, Australia’s industrial relations tribunal, which has the authority to terminate enterprise agreements under certain conditions. The legal dispute hinged on whether the criteria for termination outlined in section 243 of the Fair Work Act 2009 were met. Specifically, the association argued that the agreement had become financially unviable, and that terminating the agreement was necessary to prevent financial collapse.

The Commission examined whether the agreement was causing, or likely to cause, significant financial hardship to the association, which is a condition precedent for termination. The association presented evidence of financial deficits and unsustainability of the enterprise agreement. The Commission had to assess the financial evidence and determine whether the agreement was indeed causing, or likely to cause, significant financial hardship. It also had to consider whether there were other reasonable steps that could be taken to avoid the hardship, such as renegotiating the agreement with the employees.

After thorough consideration of the evidence, the Fair Work Commission concluded that the association had met the threshold for termination under section 243 of the Fair Work Act. The Commission found that the association was experiencing significant financial difficulties and that the enterprise agreement was a contributing factor. It determined that the association had not demonstrated that there were other reasonable steps that could be taken to avoid the financial hardship. Consequently, the Commission granted the application and terminated the 2019 enterprise agreement, effective from the date of the decision. The termination order is subject to the usual appeal rights and conditions for re-entry into force of the agreement if certain conditions are met.

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